WOOSTER, Ohio, Oct. 12, 2018 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1.4 million, or $0.53 per common share, for the quarter ended September 30, 2018. This represents an increase of $563,000, or 65.8%, compared to $855,000, or $0.31 per common share, for the quarter ended September 30, 2017. The increase in net income was due to an increase in net interest income, an increase in other income and a decrease in noninterest expenses. The return on average equity and return on average assets for the third quarter of 2018 were 13.12% and 1.22%, respectively, compared to 8.06% and 0.77%, respectively, for the same period in 2017.

President and CEO James R. VanSickle commented, “We are pleased to announce a fifth consecutive quarter of record earnings for our shareholders. Our 13.12% annualized return on average equity, 1.22% annualized return on average assets and an efficiency ratio of 60.03% are just a few among many highlights for the quarter ending September 30, 2018. Our outstanding team continues to work diligently at delivering great results for both our shareholders and customers. We truly appreciate the support of our customers, staff and shareholders as we continue to execute our plan to become a top-performing community bank.”

2018 Quarterly Business Highlights

Net interest income was $4.0 million for the quarter ended September 30, 2018, an increase of $287,000, or 7.8%, compared to the quarter ended September 30, 2017. The quarterly average loan balances increased $24.8 million, or 7.3%, to $365.5 million from the September 30, 2017 period. Our net interest margin increased from 3.44% for the quarter ended September 30, 2017 to 3.56% at September 30, 2018. This increase was the result of an increase in our yield on average interest-earning assets of 24 basis points, partially offset by an increase of 12 basis points in the average cost of interest-bearing liabilities.

Provision for loan losses was $90,000 in the third quarter of 2018, mainly due to increased growth in the loan portfolio.

Noninterest expense totaled $2.7 million for the three-month period ended September 30, 2018, a decrease of $177,000, or 6.1%, compared to the three months ended September 30, 2017 primarily due to reduced net occupancy and equipment expense, legal expense, professional fees and auditing and accounting expense related to deregistration from the Securities and Exchange Commission. The Company’s efficiency ratio improved from 69.22% for the three-month period ended September 2017 to 60.03% for the same period in 2018.

The Company, reported net income (unaudited) of $3.6 million, or $1.34 per common share, for the nine months ended September 30, 2018, an increase of $1.4 million or 64.0%, compared to $2.2 million, or $0.79 per common share, for the same period ended September 30, 2017. The increase in net income was due to an increase in net interest income, a decrease in noninterest expenses and a decrease in federal income tax expense partially offset by an increase in provision for loan losses. The return on average equity and return on average assets for the year-to-date period ended September 30, 2018 were 11.27% and 1.05%, respectively, compared to 6.96% and 0.65%, respectively, for the same period in 2017.

Net income for the nine months ended September 30, 2018 was also negatively impacted by a proxy contest for the election of directors at the 2018 annual shareholders meeting. The proxy contest expenses, which were included in noninterest expense, totaled $164,000 for the nine months ended September 30, 2018 and $420,000 for the same period in 2017. The return on average equity and return on assets adjusted for the proxy expenses for the nine months of 2018 would have been 11.58% and 1.08%, respectively, compared to 7.84% and 0.74%, respectively for the same period in 2017.

2018 Year-to-Date Business Highlights

Net interest income was $11.6 million for the nine-month period ended September 30, 2018, an increase of $853,000, or 8.0%, compared to the same period in 2017 as the nine-month average net loan balances increased $20.3 million from the September 30, 2017 period. Net interest margin increased 18 basis points to 3.54% for the nine months ended September 30, 2018. This increase was the result of a 22 basis points increase in the yield on interest-earning assets offset with an increase in the average cost of interest-bearing liabilities of 4 basis points.

Net loan balances increased from $345.9 million at December 31, 2017 to $369.2 million, an increase of 6.7%, despite selling $10.9 million in mortgage loans through September 30, 2018 compared to $8.3 million during the 2017 year-to-date period.

Provision for loan losses was $428,000 for the nine-month period ending September 30, 2018 as a result of growth in the loan portfolio and increased specific reserve requirements for classified credits in 2018.

Noninterest expense totaled $8.5 million for the nine-month period ended September 30, 2018, a decrease of $645,000, or 7.0%, compared to the September 30, 2017 nine-month period. This decrease was primarily due to reduced salaries and employee benefits and legal expenses related to the proxy contest of $176,000 as the Company utilized our prior experience. The Company’s efficiency ratio improved from 73.99% for the nine-month period ended September 2017 to 64.21% for the same period in 2018.

On December 22, 2017, H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Reform Act”), was enacted into law. Beginning in 2018, the Tax Reform Act reduces the federal tax rate for corporations from 35% to 21% and changes or limits certain deductions. Income before federal income taxes for the nine months ended September 30, 2018 increased to $4.3 million from $3.0 million for the same prior year period. Despite the increased income before federal income taxes, the provision for federal income taxes for the nine months ended September 2018 declined to $743,000 compared to the prior year period of $832,000 as a result of the federal tax rate reduction. The effect of this change lowered the Company’s effective tax rate from 28% for the nine months ended September 30, 2017 compared to 17% for the same period in 2018.

September 30, 2018 Financial Condition:

At September 30, 2018, the Company had total assets of $471.5 million, an increase of $31.7 million, from total assets at December 31, 2017. The increase in total assets was primarily due to an $23.3 million increase in net loans compared to December 31, 2017. Loan balances generated from commercial relationships increased $21.8 million, or a 11.6% increase over the December 2017 balances, most of which was secured by real estate property.

The allowance for loan losses was $2.9 million at December 31, 2017 and increased to $3.3 million at September 30, 2018 due to portfolio growth and related increased specific reserve requirements for classified credits in 2018. The allowance for loan losses and the related provision for loan losses is based on management’s judgment and evaluation of the loan portfolio. Management believes the current allowance for loan losses is adequate, however changing economic and other conditions may require future adjustments to the allowance for loan losses.

Total nonperforming loans remained at $1.9 million for both December 31, 2017 and September 30, 2018.

Total liabilities increased from $398.2 at December 31, 2017 to $428.2 million at September 30, 2018 mainly due to increased Federal Home Loan Bank advances and deposit growth. The deposit growth was primarily due to newly offered Platinum checking balances introduced to the market in the fourth quarter of 2017which totaled $38.1 million at September 30, 2018. These new high-interest checking products were partially offset with declines in saving, money market and certificate of deposit balances as existing customers also chose the high-interest Platinum product. The Company is continuing to enhance its deposit products in an effort to serve its customers and increase deposit balances.

Established in 1899, Wayne Savings Community Bank, the wholly owned subsidiary of Wayne Savings Bancshares, Inc., has eleven full-service banking locations in the communities of Wooster, Ashland, Millersburg, Rittman, Lodi, North Canton, and Creston, Ohio. Additional information about Wayne Savings Community Bank is available at www.waynesavings.com.

Forward-Looking-Statements This release contains forward-looking statements that are not historical facts and that are intended to be “forward-looking statements” as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company’s future operating results. When used in this release, the words “expects,”“anticipates,”“intends,”“plans,”“believes,”“seeks,”“estimates” and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company’s loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company’s loan and other products; unforeseen increases in costs and expenses; lower-than-expected revenue or cost savings in connection with acquisitions; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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